International Investment Opportunities within the GCC

Residential or commercial property rates have actually come under pressure after a period of strong growth, with recent data from the Dubai Land Department revealing a drop in mortgage transactions and money sales. However, we believe the danger of an enduring migrant outflow and a severe downturn in the property sector is low.

As a long lasting US-Iran offer takes shape, the fallout from the conflict has tightened up local financial conditions, exposing vulnerabilities through capital outflows, larger bond spreads, and weaker financier sentiment. Most GCC sovereigns bring relatively little debt and financing risks are therefore restricted in the UAE, the reserve bank's liquidity management has relieved instant issues.

That said, Bahrain has actually been able to rely on assistance from neighbours, including Saudi Arabia and the UAE, and it successfully raised $1bn from an oversubscribed sovereign bond sale this month, marking the first offering from the area because the war began. High-frequency fiscal information underscore the stress on regional public financial resources from the conflict.

ANSR July GCC PRs 50DR+

Key Stock Market Strategies for GCC Investors

In Saudi Arabia, the deficit spending more than doubled to SAR125.7 bn, or about 9% of GDP in Q1, driven by a decline in oil income and a rise in spending, particularly on subsidies, reflecting contingency investments tied to the regional environment and an acceleration of Vision 2030 costs. In Qatar, the crisis brought oil and gas profits to a stop, swelling the spending plan deficit to the largest since 2017.

GCC inflation dynamics remain uneven, with food rates the main source of upward pressure and inflation in this category strengthening in Kuwait, Oman and Qatar. By contrast, food inflation stays fairly suppressed in Saudi Arabia, likely showing the mitigating result of its larger domestic food production base and higher supply-chain strength.

We continue to view rate pressures as mostly transitory rather than a sign of a sustained inflationary cycle. Appropriately, we expect average inflation to alleviate to 2.1% y/y in 2027 as short-term supply-side pressures dissipate. With near-term inflation elevated and transit through the Strait likely set to resume slowly, we expect the US Federal Reserve to keep rate of interest on hold till December, and regional rate policies to follow suit.

We expect Iran's GDP to shrink by 10.8% this year (we anticipate a 9.4% contraction three months ago). Oil production and exports, which supply essential profits and FX inflows, have actually been reduced by the United States naval blockade, while non-oil activity has actually been badly struck. In Iraq, oil exports have actually collapsed to a trickle and we're anticipating GDP to agreement by around 22% this year, with a sharp 33% rebound in 2027 as oil exports normalise.

By contrast, Syria continues to reintegrate into the worldwide economy after more than a years of civil war. We expect GDP growth to average 9.6% over 2026-2027, supported by restored financial investment, particularly in banking and energy, financial reforms, and the gradual resuming of local trade links.

Key Capital Shifts for the Future

The World Bank has actually slashed its 2026 development projection for Middle East economies, stating general GDP development in the area is anticipated to slow from an approximated 3.6% in January to 1.8% for 2026. The closure of the tactical Strait of Hormuz, and damage of energy and public facilities, had disrupted markets, increased financial volatility, and compromised the 2026 development outlook, the World Bank Group stated in its Economic Update for the Middle East, North Africa, Afghanistan and Pakistan.

The April 2026 World Bank's Macro Hardship Outlook anticipates that the area's aggregate (leaving out the Iran) GDP growth will decrease to 1.8 percent in 2026, down from 4.0 percent approximated for 2025. The 2026 projection has been downgraded by 2.4 portion points since the January forecasts, showing the unfavorable effects of the continuous conflict.

Saudi Arabia: Projection was devalued by 1.2 percentage points since January. Development is now anticipated to slow from 4.3% in 2025 to 3.1% in 2026, keeping in mind that Saudi Arabia's outlook stays the strongest amongst Gulf economies. United Arab Emirates: Growth projection for the UAE has actually fallen by 2.7 percentage points considering that January.

Qatar: Significantly, growth projection for the Qatari economy has seen a sharp decrease of 11.0 percentage points given that January. The economy is now expected to tape-record a contraction of 5.7%, down from an estimated development of 5.3%, due to severe obstruction to melted gas materials. Qatar is a key player in the worldwide energy market, with a global market share of melted natural gas (LNG) supplies ranging in between 20% and 21%.

Kuwait relies totally (100%) on the Strait of Hormuz to export its petroleum and derivatives. Subsequently, closing the strait would imply a total shutdown of the nation's financial lifeline, immediately halting earnings inflows to the state budget. Bahrain: Development projection for Bahrain's economy has declined by 1.8 percentage points given that January.